Bank acquisition leads to a threat of foreclosure

While describing every exasperating turn in his financial bout with People’s United Bank, Joseph R. Kunkel manages to keep a smile on his face.

And that is tough, because the bank is threatening to take his home, his business and his livelihood — in one fell swoop.

Let’s start with Mr. Kunkel’s version of events.

Mr. Kunkel is 59, a Vietnam-era U.S. Army veteran (he served stateside) and a lifelong resident of Webster. He has been running the Woods Grove mobile home park on Gore Road for many years, as well as another park in Templeton. For the past three years he has lived in one of the 24 mobile homes at Woods Grove

Mr. Kunkel owns about 35 acres, about 20 acres of which are undeveloped. The land is his single biggest asset, assessed at $840,100, according to the Webster town assessor’s website. It’s been appraised at $1.1 million, Mr. Kunkel said.

In 2009 and 2010, Mr. Kunkel fell behind on his taxes. The town put liens on the properties. But according to the Webster town collector’s office, Mr. Kunkel has paid the past due bills and is up to date.

His only revenue stream is the rent he receives from his tenants. But it is enough to pay the bills.

In February 2007, acting as president of the Woods Grove Realty & Management Corp., Mr. Kunkel borrowed $490,000 in a 20-year commercial loan from Flagship Bank and Trust Co. The rate was 8 percent — pretty high. But Mr. Kunkel needed the money to pay off other debts and make some improvements to the property, so he signed on the dotted line.

He knew the loan officer at Flagship, checked in with him regularly and has paid his $4,134.87 payment faithfully every month for five years. (In 2008, he took out another smaller loan for $40,000, and is up-to-date, paying $825 a month, on that as well).

I repeat: He is up to date on his loan. He sent in the October payment last week.

But while nothing has changed with Joe Kunkel, things have changed at his bank.

In June 2007, Flagship Bank was acquired by Bridgeport, Conn.-based People’s United Bank, which acquired Flagship as part of its $1.9 billion purchase of Vermont-based Chittenden Corp.

People’s United is a regional mid-sized bank with $28 billion in assets, offering commercial and retail banking, and wealth management through a network of 416 retail locations in Connecticut, New York, Massachusetts, Vermont, New Hampshire and Maine. At the time of the merger, Flagship Bank and Trust had a mere $500 million in assets and eight branches.

Mr. Kunkel did not think about his bank’s change in ownership. He had a loan, and he was paying it every month, with interest.

Fast forward to February of this year: People’s United wrote Mr. Kunkel a letter, asking for some financial documents, including tax returns. Commercial loans are regularly reviewed every five years, so he provided the documents without concern.

There were no calls and no meetings with anyone at People’s United Bank.

Since then, he’s gotten only letters. Demanding letters.

In April, he received a notice that the bank was demanding he pay the full amount due — $430,937.90. No explanation, just pay.

Mr. Kunkel said he was “blindsided.”

“I never in a million years considered that they would do this,” he said, “and without telling me anything — just doing it. It’s wrong.”

In August, Mr. Kunkel received a letter from a local lawyer, saying that the loan was in default, and that charges will continue to accrue until the loan was paid off in full. The interest rate was increased to 10 percent.

An email from that lawyer to Mr. Kunkel’s lawyer in September said 45 days after Sept. 5, “if there is no evidence of payoff through refinance, the Bank will reinstate default rate and seek to commence foreclosure.”

By my quick math, I calculate that foreclosure date would be next Monday, Oct. 22, assuming that the bank could not foreclose on a Sunday.

I tried for two days to get a response from People’s United Bank. I sent emails and left voicemails at the Worcester office and at its Connecticut corporate headquarters, to no avail.

People’s United has every right to choose loans with lower risk, dropping from its portfolio what it considers a high-risk loan made by one of the smaller banks it swallowed.

The bank’s loan officers in Bridgeport, Conn. probably looked at Joe Kunkel, at his mobile home park, noticed that he fell behind on his taxes a few years ago and said, “Let’s get out of this one.”

Now, I can bet if Flagship Bank were still in business it would be working with Mr. Kunkel, meeting with him to discuss options, before unilaterally deciding to foreclose on the loan. That’s what a local community bank would do.

Flagship Bank is long gone. People’s United Bank is here now.

They owe Joe Kunkel an explanation.

He’s still waiting.

Contact Aaron Nicodemus by email at anicodemus@telegram.com or at (508) 793-9245.

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